Boehner's Fiscal Cliff Plan B Fails. Now What?

It was supposed to be a demonstration of strength. It turned out to be a demonstration of weakness.

When Republican House Majority Leader John Boehner informed the White House that he'd be holding a vote on "Plan B," a bill to extend the Bush tax cuts for all income under $1 million, his goal was not for the plan to become law. It was to put President Obama in a more difficult spot: It would demonstrate Boehner's control over his caucus, pushing through a vote on a tax increase for the highest earners. And it would give Republicans a way to blame Democrats should no deal be reached: Republicans could say they had voted to avert a tax hike on most Americans, and increase tax rates on high incomes — and Democrats had refused to support it.

That was the plan, anyway. But enough of Boehner's colleagues in the House refused to go along that it didn't come together. At the last minute on Thursday night, Boehner canceled the vote. He just didn't have the support he needed. What the top House Republican ended up proving was that he wasn't in control.

What explains the refusal to go along with the GOP Speaker? As far as I can tell, it's pretty straightforward: There were enough House Republicans who really didn't want to vote for any bill that would allow tax rates to rise on anyone, even, and perhaps especially, a bill that wasn't actually intended to become law.

Sounds simple enough, right? But the unique circumstances of the fiscal cliff make it a little more complicated. Now that Plan B has failed, we might well go over the fiscal cliff, thus allowing the Bush tax cuts to expire. That will mean higher tax rates on everyone, at least until Congress inevitably passes a bill to reinstate the Bush tax cuts for everyone below $250,000.

In other words, Republicans were so opposed to casting a strategic vote raising taxes on anyone that they instead pursued a strategy that may have the effect of allowing taxes to go up on everyone, or at least those making more than $250,000.

So what happens now?

Two possibilities remain. One is that we go over the fiscal cliff, and then terms of the fight change permanently: Income taxes go up on everyone, there's no alternative minimum tax (AMT) patch or doc fix, and some of the fiscal cliff spending reductions start to kick in.

What will Republicans do then? At Forbes, Avik Roy suggests that the GOP could bargain from there for a better deal, including some sort of entitlement reform. I'm skeptical. This is, after all, the same GOP that just voted against a strategic tax hike that wasn't going to become law — despite the fact that it might have given them leverage to actually prevent real tax hikes from happening. Once taxes go up, how likely is it that those same Republicans will then refuse to vote for a package that reduces tax rates on earnings under $250,000?

But going over the fiscal cliff is not quite inevitable. Not yet. Boehner can still cut a deal with the White House — and he doesn't even need unified Republican support to do it. If Boehner and Obama agree on a deal, then Boehner can pass it on a bipartisan basis with a large number of votes from House Democrats. And as The Examiner's Philip Klein points out, there's precedent for this approach:

Keep in mind that during last year's fights over the government shutdown and raising the debt ceiling, Boehner wasn't able to unify his members, so he cut a deal with President Obama that passed the House with the help of Democrats. We don't know exactly how many votes Boehner was short tonight, but we do know that he had little margin for error going in — he could only lose 23 Republicans, assuming Democrats held firm. Were Boehner instead to cut a deal with Obama that could attract Democratic support, it would give him a greater cushion. Going back to last year, 59 Republicans voted against the deal to avert the government shutdown and 66 voted against the deal to raise the debt limit — and yet both measures sailed through comfortably with Democratic support.

It was always clear that any deal would be a last-minute deal. That's still the case. Indeed, Boehner may now feel a sense of urgency to make a last minute deal the only way that seems plausible at this point — by going forward with a bill that lots of House Democrats will also support. But part of the question now is whether Boehner actually wants to make a deal that relies heavily on Democratic votes, and which could help cost him his speakership, which is up for a vote at the beginning of next year. Boehner already demonstrated his weakness with Plan B. Is he willing to do it again?

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Lower spending is MORE IMPORTANT than lower taxes. The only way we’re going to get lower spending is by trading higher tax rates for it.

And that is a way saner thing to do than trading more spending for lower taxes, which is what Republicans have traditionally done. The only way R’s going negotiate NO tax increases is by giving Obama his extra spending on welfare and green energy.

Of course not, those taxes aren’t your that are guaranteed to go up. I like how you want to piss away my money Hazel.

Cute trick advocating collectivizing risk then turning around and advocating lower spending. Unfortunately, you find yourself in the same boat with the electorate when trying reduce spending on entitlements when they are already locked in.

A couple issues: He’s right that a fiscal consolidation is in order. And a pure cliff jump would do it. But…

1) …if it worked as deficit reduction, it would do so in a particularly awkward way, not only raising income tax rates but cutting physician reimbursements in Medicare by 25-30% and forgoing an AMT patch, which sets the stage for long-term AMT creep, which probably isn’t politically sustainable.

2) …it wouldn’t actually work, because as soon as we go over the cliff, Congress is almost certain to reinstate Bush tax rates for most everyone and override a lot of the spending cuts.

3) …he seems to think that Republicans, who did not want their names on a tax increase for millionaires that was never intended to become law (a tax “hike” that Grover Norquist gave them a pass on), will hold off on voting for a tax reduction once rates go up, and use their votes to negotiate a better deal. This does not seem plausible to me.

He should have just put up a clean extension of the current rates for everyone, and gone home.

Then it becomes the Dems are holding tax cuts for the middle class hostage to their lust for higher rates on the wealthy.

Force the Dems into an up or down vote on tax cuts for everyone or no one, and see what they do. At that point, it gets to be really hard to blame the Repubs because the Dems refuse to extend the current rates for the middle class unless they get higher rates for the rich.

But no, the inept Boehner just had to try to play nice with people who are negotiating in bad faith. What a tool.

That’s what they should have done. Granted, the Dems and most of the media would be desparately spinning to destroy any impression that it is the Dems intransigience on raising the upper income rate. At some point the GOP has to realize that rhetoric aspect of the game is rigged against them and stop giving a shit about it.

2) …it wouldn’t actually work, because as soon as we go over the cliff, Congress is almost certain to reinstate Bush tax rates for most everyone and override a lot of the spending cuts.

Exactly. On Jan 2nd, the Democrats are going to come back and pass a bill that reduces taxes for those making less than $250K, and attach repeals of the sequester cuts to domestic spending.

The only thing the R’s can do is refuse to to vote on it, leaving tax rates higher for everyone. And when the middle-class sees that first hit on their paycheck in January, the shit iwll hit the fan and it will be over for the R’s.

If the outcome is negative, which it surely will be whether through a deal or failure of a deal, the Republicans will shoulder the blame. However, each individual House member really only needs to be concerned with his own district, and I can assume there are enough conservative strongholds that would punish any vote to raise taxes to queer any deal that included it.

The political manuevering here should be enough to remind the country the disfunction in Washington, but as I said, the story will be framed by the White House and its willing press that the GOP is solely the cause.

What sounds better to you? The “fiscal cliff”, or the “fiscal cliff” with fewer tax hikes.

Apparently the Republicans prefer the former. And what is it going to get them? The day after January 1, all the tax hikes take effect and then they are really in for shit. Hundreds of millions of people are going to see their payroll taxes go up their first pay period after the new year. And they are going to blame the Republicans. And the Democrats will then have all the leverage. They will pass a plan to reduce taxes for those making

making under $250K, and they will attach all sorts of spending to it, and it will be skewed in favor of discretionary spending over defense, and they will hand it to Republicans and tell them to pass it or face the blame for those hundred million some people seeing their taxes go up.

The Republican prefer shooting themselves in the foot, apparently. They are retarded. Taxes are going to go up on people making over $1,000,000 ANYWAYS. There’s nothing they can do about that.

And how long do you think it will take them to blame the people who are really responsible for that? Do you think it’s the Dems or the Reps at fault here? It’s a problem with the whole fucking mess. The only reason the Reps are fighting it now is because the President is a Dem.

Hazel, I think you are REALLY overstating the impact of the tax increases.

Realistically most middle class people will see their annual tax bill go up by less than $1000 a year. Spread that out over 26 pay periods and you’re looking at about $40 a paycheck, sure it is a hit and no one is going to be happy about it but they are unlikely to be rioting in the streets either.

Our government gets lost in the weeds just as this comment section gets lost in the weeds. It’s just not worth subjecting my thought processes to trudge through the weeds any further. A better use of my time would be rereading Democracy, the God that Failed by Hans-Hermann Hoppe.

What? Leave the comments and do your own thing, without showering your enlightenment on us? That’s worse than Depardieu leaving France when they’re in the middle of a fiscal crisis, and not paying his fair share in wealth taxes!

That will mean higher tax rates on everyone, at least until Congress inevitably passes a bill to reinstate the Bush tax cuts for everyone below $250,000.

“Inevitable” does not mean what you think it does, Suderman. Boehner tried to raise taxes, and lost. Through some convoluted reasoning, you think that the refusal to raise taxes on anyone at all means those same people will agree to raise taxes on even more people than Boehner proposed?